Effect of demand uncertainty on the relative economics of electrical-generation technologies with differing lead times
- Univ. of California, Davis
Projections of future electricity demand are subject to considerable uncertainty. Because the demand depends on factors such as population and economic growth - the more distant the time period for which the projection is made, the greater is the uncertainty. Thus, generation technologies with different lead times face demand forecasts with different levels of uncertainty. This fact affects the relative economics of generation technologies with differing lead times. A model is described in which a stylized electric utility faces the decision between a short- and a long-lead-time technology in an uncertain environment. A dynamic-programming algorithm is used to determine the least-cost investment decision. It is shown that uncertainty can lead to the choice of some short-lead-time capacity, even when the deterministic solution includes only long-lead-time capacity. The extent of this effect depends on the nature of the probability distribution of future demands and the relative fuel and capital costs of the two technologies. 9 references, 7 figures.
- OSTI ID:
- 5057468
- Journal Information:
- Energy Syst. Policy; (United States), Vol. 4:1-2
- Country of Publication:
- United States
- Language:
- English
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